Ask the Expert: Creating the hi-tech start-up team
What role does the team play in an investor's decision to invest in a startup business?
A team is an organized group of people working together to achieve a goal. Many of today's hi-tech products are so complex that no one person is capable of understanding every aspect of the product or how to successfully bring the product to market. The success or failure of a start-up business is inexorably linked to quality of the team assembled. Having the right combination of people at the right time is the key to success.
Why is the founding team so important? At the beginning, there is nothing but an idea. Investors, such as Borealis Ventures, are funding a team and a belief that they can do what they say they can do. Not only does everyone need to perform a diverse range of functions, they all need to work in concert with each other to achieve the end goal.
Experience is of the utmost importance when there is only one person to perform a job function in a startup. Never confuse the number of years someone has worked with years of experience. A candidate may have worked for 15 years, but that does not necessarily mean that they can perform at a level beyond someone with only a few years of experience. Credibility is based upon accomplishments, not years worked. We also value previous experience in an unstructured, start-up environment.
Start-up work is different from work inside a large corporation. It places a premium on flexibility and willingness to get the job done in the face of seemingly insurmountable odds and with very little resources. It favors team players that measure personal success based on the achievement of collective goals. Teams that are comprised of domain experts with previous start-up experience stand a much greater chance of achieving their goals.
Management and leadership is another area where there can be shortcomings in the team. Just because someone has years of experience performing a specific skill does not mean they can lead a team. Nor does giving someone a managerial title make the team follow that person's direction. Start-ups thrive with experienced staff members. Seasoned employees will not follow someone's lead without believing in the task and the direction in which the project is going. Start-ups need to attract and build small, highly effective, performance oriented teams.
Myths and common mistakes
--A START-UP OF ONE. A team is not one person. No one can do it alone. Investors are willing to help you build a startup team, but not the whole team needed to move the start-up forward. Investors rarely want to invest in one-person shows. If the founder can't convince other people to join in the company, why should the investor believe the founder could convince customers to buy the product?
--RIGHT PEOPLE/WRONG TIME. Hiring a great experienced person at the wrong time during the corporation's life cycle is a misstep. You shouldn't hire an experienced senior executive from a large, established company for a seed stage start-up. Often, the executive's best skills are making incremental process improvements, driving efficiency into an organization, and expanding an established market presence.
--THE LOPSIDED ORGANIZATION. A recipe for failure is when the founders build a lopsided team, heavily weighted to one specific function, and neglect other functions. Often, this mistake occurs because founders stick with what they know best and trivialize the importance of the other functions in making the company successful. Some technical founders believe "if you build it, they will come." Unfortunately, they often learn the hard way that products don't sell themselves.
--A TEAM IS NOT A COLLECTION. A team is not a random group of individuals who are simply willing to work on the project. This may seem obvious, but it is amazing how many times a group of disparate people form a start-up with no rhyme or reason as to what roles they play within the organization or whether their skill sets are complimentary or necessary. Every team member serves a purpose and should have an area of expertise and a responsibility.
A hi-tech start-up team is a team of entrepreneurs embarking upon a high-risk adventure. To be successful at all, regardless of whether it's the next multibillion dollar company or just a few million, means you've won against extraordinary odds. The team is one of the top reasons for success. Choose it wisely.
I look forward to answering your questions and/or responding to your comments at www.unionleader.com/expert or http://abihub.org/ask-the-expert/.
Matt Rightmire is a managing director at Borealis Ventures, a venture capital firm with offices in Hanover and Portsmouth. The firm operates the Borealis Granite Fund, a pool of capital dedicated to investments in growing technology companies based in New Hampshire.